19 October, 2009

Public Works

The way public works contracts in Anguilla are awarded.  The Anguilla Government is in the process of awarding contracts for the construction of a 500 metre “Runway End Safety Area” or “RESA” at Wallblake Airport.  The cost of constructing this safety area is expected to be in the range of EC$10,000,000.00 and upwards. 

I have learned that there will be no ‘bidding’ or ‘tendering’ for any of the contracts.  Instead, the Ministry of Infrastructure has divided the project up into several separate contracts, and proposes to share them out “equitably and without regard to politics” according to who’s got the required equipment.  Junior Fleming is on the list, but so is Greig Hughes.  That is supposed to mean that the process is fair and equitable!

As I understand it, the Ministry of Infrastructure will carve up the RESA project into, say, for the purposes of this discussion, 5 equal separate contracts, allocating prices to each of them.  As I understand the proposed “fair and equitable” award procedure, a Ministry of Infrastructure agent will go to Contractor A and say, “We have decided to award you Contract A for $2 million.  That is your fair share of the RESA project.  Do, you accept it?”  Contractor A does his sums.  Let us say he realises he will make a 50% profit.  Of course he says “Yes”.  The same happens with Contractors B, C, D and E.  Everybody is happy!

Now, let us look at how the tenders procedure was supposed to work.  Suppose that there are several Anguillian contractors, all equally competent and qualified.  Suppose they are all interested in one or more of those 5 separate contracts.  Say, Contractor A studies the tender documents for one of the contracts, and thinks he could do it for $2 million, and make his profit.  Contractor B might have fewer overheads than Contractor A, and concludes that he could do it for $1.8 million.  Unknown to them both, Contractor C is prepared to shave his profits down, and he puts in his bid at $1.5 million.  All qualified Anguillian contractors put in their various bids.  Their bids are opened by the Tenders Board.  The Board awards the contract to the most competitive bidder, in this case Contractor C. 

Public works contracts are not supposed to be awarded by government officials to chosen recipients at a price determined on a Heaven-alone-knows-what basis.  Government contracts are supposed to be bid on competitively.  The correct and proper process is called ‘tendering’ for government contracts.  The mandate of the Tenders Board is to protect the public purse in the award of public works contracts.  The independence and procedure of the Tenders Board is meant to be guaranteed by a statute.  The Tenders Board is not expected to act like anybody’s pet poodle.  They are not supposed to award contracts on the basis of whether they will get government the most favourable publicity and popularity.  Their duty is to select the bid that will be in the best interests of the people. 

Tendering is the only known and proven way for government to be transparent and accountable in the award of public works contracts.  Tendering for public works contracts happens in every Commonwealth Caribbean country, except Anguilla

In my view, the procedure that government intends to follow in awarding these major pre-election airport contracts is the opposite of fair, transparent and accountable.  The award procedure may be politically safe and popular with the contractors.  But, it is not fair to the consumer, that is, to you and me.  It is a system of pre-selecting contractors that must by its nature and effect be the opposite of fair, transparent and accountable.  If you want all 5 contractors to have a fair chance at each of the 5 contracts, let them bid on each one of them.  Let the best bid win in each case.  That is fair, transparent and accountable.

Let the contractors do what they are supposed to do.  Let them compete for public works contracts.  Award each contract to the one with the best offer.  The present system reminds me of a dog-owner handing out treats to his pets.  It is a contemptible failure of a system. 

The procedure proposed for the award of the RESA contracts rewards the inefficient.  It punishes the public by failing to ensure the best bang for the buck.  No doubt, it has evolved partly out of ignorance of the proper procedure.  It has also evolved partly to ensure that the party in power is popular among all the contractors who are invited to do public works contracts.  They each control a lot of votes.  In the case of the RESA project, no one notices that $10 million is going to be paid out for contracts that may really only be worth $7 million. 

Consider this.  Not all public works projects are this big.  Not every project can be divided up into separate contracts and shared out to several contractors.  There have been hundreds of smaller contracts over the years that have been awarded to pre-selected contractors.  Tell me why this should not be described as an intrinsically corrupt system.

Consider this also, how many of our politicians have brothers, sons, and campaign managers who are either building contractors or heavy equipment contractors?  How many Anguillian politicians have shares in construction companies?  Do these politicians allow Public Works to treat their companies in the same way as all other Anguillian contractors in the award of public works contracts?  They would have to be all angels for that to have happened!

And, yes, the procurement process, even when protected by statute, can be corrupted by crooked contractors, public servants and politicians.  At least then we know who to prosecute.  Under our present weak and inefficient system, no one commits a crime while doing the same thieving and wasting of public funds.

Meanwhile, may the public see a copy of the Medium-Term Air Transport Sector Plan 2004-2008 done in connection with EDF9?

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  1. could this be class as corruption and the department heads in on it? Why they after collecting tax from everybody if when the time to payout only a select few get?

  2. First there's the old joke, "Good. Fast. Cheap. Pick two."

    So, we've already talked about the Hawaii example, where a town banged out a crucial bridge for less time and less money than the state budgetary process itself took, and of course, the runways on Tinian during World War II.

    There's also the Northridge quake in Los Angeles, where a critical overpass reconstruction was let under an actual zero-bid fixed price contract with very expensive failure penalties. The construction was done considerably before deadline and under budget, and the contractor was *encouraged* to do so because he was allowed to pocket the surplus.

    Finally, we're looking at something like a barn-raising here. Call it -- and this'll cause a fuss here, certainly -- a jollification, but for profit.


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